Shares tumbled across the building and construction sector yesterday after Wilson Bowden, widely regarded as one of the industry's best companies, warned on second-half profits, writes Tom Stevenson.

Following the withdrawal of Tarmac from the market last week and rumours that Trafalgar House is looking to quit housebuilding, Wilson's statement appeared to mark the peak of the current housing cycle.

The company's shares slumped 28p to 343p after it said it did not expect second-half profits to exceed those for the first half. Interim results would themselves be only marginally ahead of last year's. One analyst said: "This crystallises what everybody knew about the housing market being pretty grim."

Wilson Bowden is now expected to make full-year pre-tax profits of pounds 32m compared with earlier forecasts of pounds 36m or higher. Last year, Wilson made pre-tax profits of pounds 37.1m after selling just over 2,000 houses.

Other shares to fall yesterday included Wilson Connolly, down 6p to 161p, Persimmon, down 6p to 206p and Bryant, which closed 8p lower at 129p. The falls followed a 10 per cent underperformance by the sector since the beginning of the year as the market started to worry that the industry's recovery had ended.

Wilson Bowden has a reputation for being unusually cautious on prospects. Its results suffered much less during the recession because it avoided the temptation to over-expand. But its comments yesterday were unambiguous.

David Wilson, chairman and chief executive, said: "As noted by several commentators in the industry, conditions in the housing market turned down sharply in mid-June and this situation has continued."